Ensure you never breach your FTMO or Funding Pips daily drawdown rules by tracking your precise equity limits.
If your equity drops below this, you lose the account today.
Hard breach limit for the lifetime of the challenge.
Proprietary trading firms (prop firms) like FTMO, Funding Pips, and The Funded Trader offer massive capital to skilled traders. However, their strictest rules revolve around Daily Drawdown and Maximum Drawdown. Violating these rules results in an instant hard breach and loss of the account.
Most prop firms calculate your daily drawdown based on your starting equity or balance at 00:00 CE(S)T. If you have a $100,000 account and a 5% daily drawdown limit, your equity can never drop below $95,000 during that trading day. Importantly, this includes floating losses. If you are in a trade that drops $5,001 into the negative, but then reverses and closes in profit, you still fail the challenge because you breached the intra-day floating limit.
If you are using an Expert Advisor (EA) to pass a prop firm challenge, you must ensure the EA uses strict stop-losses. Grid and Martingale EAs often keep trades open in massive floating drawdown waiting for the market to reverse. While these EAs might eventually close in profit on a standard broker, they will almost always breach the daily or max drawdown limits of a prop firm account.
Download the complete quantitative guide: Position Sizing Formulas, Prop Firm Drawdown Rules, and MQL5 Parameter Cheat Sheets.
